Cushman & Wakefield of Connecticut, Inc. v. 12 CDT LLC

Superior Court of Connecticut, Judicial District of Fairfield, Bridgeport

April 5, 2017

CUSHMAN & WAKEFIELD OF CONNECTICUT, INC.v.12 CDT LLC

MEMORANDUM OF DECISION

KRUMEICH, J.

In this
action Cushman & Wakefield of Connecticut, Inc. ("
Cushman & Wakefield") seeks to recover a real estate
commission earned in connection with the leasing of space in
a commercial office building located in Trumbull (the "
Premises") then owned by 12 CDT LLC (" CDT").

Findings
of Fact

CDT had
three principals: John J. Daley III (" Daley"),
Ronald Nyman (" Nyman"), and Nicholas Nicholas
(" Nicholas"). [1] The Premises was CDT's primary
asset and it was encumbered by a mortgage securing a debt in
the principal amount of $ 3, 555, 000 owed to Peoplesbank, a
Massachusetts lender (the " Bank"), and a second
mortgage securing another $ 365, 000 owed to the Bank.
[2]
On March 1, 2013, the Bank brought a foreclosure action in
this court alleging both loans were in default. On March 11,
2013, CDT filed a bankruptcy petition under Chapter 11 of the
Bankruptcy Code.

CDT had
purchased the Premises in 2005 for $ 3, 375, 000. By March,
2013 loss of tenants had resulted in negative cash flow,
which in turn led to substantial deferred maintenance and
defaults in debt service to the Bank. [3] Out of 42, 500
square feet in rentable space, as of June 2013, only 40% was
occupied and 60% was vacant. CDT had a desperate need to find
new tenants to increase revenues.

Michael
Dillon (" Dillon"), a real estate agent, had
introduced Daley to his partner Nyman when they purchased the
Premises and had worked with Daley previously to locate
tenants.

Daley
asked Dillon, who was employed by Cushman & Wakefield, to
seek tenants for the Premises. On July 1, 2013, CDT entered
into a listing agreement with Cushman & Wakefield to market
the Premises for lease. The listing agreement was signed by
Daley as manager of CDT and by James C. Fagan, Senior
Managing Director of Cushman & Wakefield ("
Fagan"), who was Dillon's supervisor.

Cushman
& Wakefield's marketing efforts were successful and on
September 11, 2013, CDT entered into a seven year lease for
16, 500 square feet with the Visiting Nurse Services of
Connecticut, Inc. (" Visiting Nurses"). The annual
rental on the first year was $ 222, 750, with increases
thereafter. CDT agreed to fit out the space for Visiting
Nurses. The term was to commence on December 1, 2013 "
or upon Lessor's notice to Lessee that Lessor's Work
has been substantially completed...." On November 20,
2013, Cushman & Wakefield sent Daley a statement of
commission of $ 97, 762.50 for its services to CDT under the
listing agreement. No one has objected to this invoice or
disputed that the amount sought accurately stated the
commission earned by Cushman & Wakefield on the Visiting
Nurses' lease.

CDT
hired Daley Construction Co., Inc. (" Daley
Construction") to do the fit out work at an estimated
cost of $ 510, 000. Daley is a 50% shareholder in Daley
Construction with his son, Robert Daley. The fit out project
began soon after the lease was signed and work commenced
shortly after a building permit was issued on November 14,
2013; the space was ready to be occupied on January 7, 2014,
when the temporary certificate of occupancy was issued.
[4]

Negotiations
between CDT, as debtor-in-possession, and the Bank resulted
in an agreement whereby the Bank agreed to accept a timely
payment of $ 1, 300, 000 to satisfy its entire claim of $ 3,
438, 013.09. This stipulation was reflected in the Second
Amended Disclosure Statement and Second Amended Chapter 11
Plan filed on September 5, 2013. The Third Amended Plan of
Reorganization filed on November 7, 2013 (the "
Plan"), confirmed after hearing by the Bankruptcy Court
on November 13, 2013, provided as follows with respect to the
allowed claim of the Bank:

1. The
debtor shall pay $ 1, 300, 000 to the Bank by November 1,
2013, in complete satisfaction of the allowed claim, time is
of the essence.

2. If
debtor failed to make payment, the stay was lifted on
November 2, 2013, and the Bank had " the absolute right
to proceed with its pending foreclosure...."

3.
Debtor would file a disclosure of no defense in the
foreclosure and waive all right to contest the foreclosure
debt of $ 3, 103, 305.33.

4. If
judgment of strict foreclosure entered, the Bank would accept
a redemption payment of $ 1, 300, 000 from debtor.

5.
Debtor would execute a quitclaim deed to the Bank; if the
Bank does not receive payment of $ 1, 300, 000, the Bank
" shall have the right to file said quitclaim on
December 30, 2013 and take title to the premises...."

By the
time the Third Amended Plan was confirmed CDT had already
defaulted on the repayment terms. As a practical matter,
unless the Bank was paid $ 1, 300, 000, the Bank had the
right to file the quit claim deed and take title to the
property on December 30, 2013. From the perspective of CDT,
as Daley testified, December 30, 2013 was the " drop
dead date" when CDT would lose title to the Premises if
it did not pay the Bank $ 1, 300, 000.

The
drop dead date created a dilemma for the principals of CDT,
which had been unable to make the payment due the Bank on
November 1, 2013. Nicholas and Nyman refused to put any more
money into CDT and, in fact, wanted to get back the money
they had already put into the project. [5] If sufficient funds
could not be raised, both Nyman and Nicholas were willing to
walk-away and let the Bank take title. Daley was in a
different situation. He had expended approximately $ 220,
000-250, 000 for the fit out work by Daley Construction and
expected to be paid the full $ 510, 000 when the work was
completed.

Daley
was the driving force behind the bankruptcy and was
desperately looking for financing to pay off the Bank and pay
Daley Construction for the fit out work. Among the people he
contacted was Dillon, who forwarded a list of lender contacts
provided by Fagan in an email dated November 7, 2013. Daley
was unable to obtain conventional financing. Daley was also
looking for new equity partners without success.

On or
about November 18, 2013, Daley received a term sheet from a
mortgage broker, Andrew E. Larew (" Larew"), for a
proposed bridge loan by a private lender, Titan Capital ID,
LLC (" Titan Capital"). The bridge loan amount was
$ 1, 700, 000 with an initial loan advance of $1, 200, 000.
Titan Capital is owned by two cousins, Ira Safferstein
(" Safferstein") and David

Safferstein,
and is in the business of making short-term bridge loans to
temporarily finance debtors until permanent financing is
arranged. Many of the debtors on these bridge loans are in
bankruptcy and need temporary financing to reorganize. Larew
had told Safferstein that CDT was looking to finance $ 2,
000, 000, but Safferstein was only willing to finance at a
loan-to-value ratio of 65% of appraised value. [6] Also
Safferstein was only willing to advance $ 1, 200, 000, not
the entire amount needed to pay off the Bank, because Titan
Capital had a policy of requiring debtors to put new money
into the project so they had " some skin in the
game", as Safferstein testified. To satisfy the term
sheet the principals of CDT would have to come up with the $
100, 000 balance needed to pay off the Bank, plus money to
pay a lender's fee of 2%, to pay miscellaneous other
fees, indemnify the lender for the mortgage broker fee, and
at closing to fund an interest reserve estimated to be $ 60,
000 and an escrow for real estate taxes estimated to be $ 12,
000. In addition, CDT's principals, Daley, Nicholas and
Nyman would have to guarantee the loan and any collection
costs and fees. On November 20, 2013, Daley, as "
manager", initialed and signed the term sheet on behalf
of CDT. The same day Safferstein signed on behalf of Titan
Capital. The loan term sheet was not a commitment and was
subject to underwriting and appraisal. After the term sheet
was signed and returned, Titan Capital heard nothing from CDT
until later in December on a loan that was supposed to close
on or before December 23, 2013.

CDT was
not able to fulfill the loan terms proposed by Titan Capital.
Nyman and Nicholas were not willing to put any more money
into the project, which makes it doubtful they agreed to
guarantee the loan let alone put another minimum $ 175, 000
into the project needed to comply with the loan terms. There
simply was not enough in the deal for them to take the risks.
Nyman had sold the company which was a tenant in the Premises
and was planning to move out of state to pursue a new
venture. Nicholas lived in Florida and had not taken an
active managerial role. A tip off that Nicholas and Nyman
were not interested in continuing as Daley's equity
partners is in the terms of the confirmed plan, which
provided the " Reorganization Debtor" would be CDT
with " John J. Daley, III as its sole member."
[7]
For Daley the loan terms promised $ 500, 000 to Daley
Construction for completing the fit out work, which meant he
would recoup his outlay for the work. By November 20, 2013,
when Daley initialed and signed the term sheet on behalf of
CDT and returned it to Titan Capital, the Plan had already
been confirmed by the Bankruptcy Court, which left Daley as
the only principal in CDT willing to carry on with the
venture. [8] If the lender had been willing to fund
$ 2, 000, 000 as initially sought, there may have been enough
to salvage the property and cover all the claims and other
costs needed to emerge from bankruptcy, but Daley alone
simply could not come up with sufficient funds needed to fund
the confirmed plan and redeem the Premises before the "
drop dead date" on December 30, 2013.

Sometime
around December 16, 2013, Daley and Safferstein came up with
a new way to finance the redemption of the Premises from the
Bank. [9] There was insufficient time to do a
bridge loan in the ordinary course of Titan Capital's
business, but Ira and David Safferstein were willing to
provide financing to pay off the Bank, pay off the liens, pay
to complete the fit out work, in exchange for a controlling
equity position in a new entity that would take title to the
Premises. After some negotiation, it was agreed that Daley
would retain a 37.5% interest and that the Saffersteins would
receive a controlling 62.5 % interest in the new entity
formed to take ownership of the Premises, Titan Cambridge,
LLC (" Titan Cambridge"). [10] On December 26,
2013, CDT, acting by Daley as its sole member and manager,
contracted to sell and then conveyed the Premises to Titan
Cambridge. The purchase price was $ 1, 300, 000 that was paid
directly to the Bank to redeem the property. [11]

Daley
testified he intended to pay the fee due Cushman & Wakefield,
but he was very vague as to how he could have done so. The
Titan Capital loan would not have provided the "
Reorganization Debtor" plan, with Daley as the sole
member of CDT, was submitted to the bankruptcy court.

funds
CDT needed to pay the $ 97, 762.50 commission earned and due
under the listing agreement. Daley knew the commission would
not be paid in the bankruptcy proceeding. Cushman & Wakefield
had not been retained as a professional in the bankruptcy and
this debt had not been disclosed to the Bankruptcy Court as
an administrative claim nor dealt with in the various filed
plans of reorganization, including the confirmed Third
Amended Plan. The confirmed plan estimated total unpaid
administrative expenses of only $ 20, 000, which is
identified as the estimated fees and costs due to
debtor's counsel. Daley and debtor's bankruptcy
counsel were aware Cushman & Wakefield had provided brokerage
services yet the retention had not been approved by the
bankruptcy court and no provision had been made to pay the
commission in the confirmed plan. [12] Daley also knew no
arrangement had been made to have Titan Cambridge pay the
Cushman & Wakefield commission, as there had been to pay
Larew's fee. Larew's $ 17, 000 commission on the
unconsummated loan transaction with Titan Capital, billed to
Daley at CDT on December 16, 2013, was later paid by Titan
Cambridge as a finder's fee for introducing Daley to
Safferstein.

The
conclusion is inescapable that at some point, prior to
submitting the Third Amended Plan of Reorganization on
November 7, 2013, Daley decided on a scheme to use the
bankruptcy proceeding to avoid paying funds due Cushman &
Wakefield. CDT retained Cushman & Wakefield during the
pendency of the bankruptcy. Daley testified that CDT's
bankruptcy counsel was aware that Cushman & Wakefield had
listed the property and was looking for tenants. During the
bankruptcy Daley was aware that CDT had received bankruptcy
court approval to retain other professionals like its
attorneys and accountants. These applications were "
nunc pro tunc", which suggests they were filed after the
professionals were already commenced providing services to
the estate. Certainly, no professional provided more valuable
services than Cushman & Wakefield, which located a major
tenant at a crucial time for the solvency of the venture. Yet
the Bankruptcy Court was not notified of Cushman &
Wakefield's retention or its commission claim, and none
of the papers filed by CDT's counsel in the bankruptcy
ever mentioned Cushman & Wakefield, despite CDT's duty as
debtor-in-possession to do so. No notice of the bankruptcy,
no disclosure statement, no plan of reorganization was ever
served on Cushman & Wakefield by CDT, although Daley and its
bankruptcy counsel were aware of its services to CDT. The
failure to bring Cushman & Wakefield's services and
commission claim to the attention of the Bankruptcy Court was
deliberate. If the Bankruptcy Court had been aware of the
Cushman & Wakefield claim, or if Cushman & Wakefield had been
aware of the bankruptcy, the Third Amended Plan might not
have been confirmed without adjustment for payment of the
commission. [13] Daley's explanation that he did
not know Cushman & Wakefield was a professional that needed
to be retained in the bankruptcy rings hollow given
Daley's explanation to Safferstein on December 31, 2013,
that he thought the debt to Cushman & Wakefield was
discharged in bankruptcy. Surely, CDT's bankruptcy
counsel knew that the bankruptcy court had to approve the
broker's retention and any commission due Cushman &
Wakefield had to be disclosed and dealt with in the
bankruptcy proceeding. The inference is strong that Daley
intended to use the bankruptcy to avoid Cushman &
Wakefield's commission. The inference is also strong that
Daley had to keep Cushman & Wakefield in the dark about the
bankruptcy and the impending transfer of the Premises to
another entity for his scheme to work.

I do
not find credible Daley's testimony that he informed
Dillon of the bankruptcy proceeding on many occasions. Dillon
denied knowing about the bankruptcy proceeding until after
the transfer of the premises to Titan Cambridge.
[14] His supervisor Fagan, known to
Daley.

was not
aware of the bankruptcy before the transfer. Neither was
Kevin Foley, the Cushman & Wakefield agent who was the
tenant's broker on the Visiting Nurses' lease, and
who visited the Premises and met with Daley on various
occasions in November and December 2013 as he observed
progress of the fit out. Daley testified he was concerned if
Visiting Nurses found out about the bankruptcy it would
jeopardize the lease. Daley also testified he assumed the
brokers would tell Visiting Nurses. [15] After the lease
was signed and until the Premises were sold and redeemed from
the Bank, the biggest threat to Daley's plan was Cushman
& Wakefield finding out about the bankruptcy and sale and
taking steps to enforce its commission claim. [16]

Daley
also did not disclose the Cushman & Wakefield's
commission to Safferstein. This was not an oversight. Daley
deliberately delayed informing Safferstein about the
commission until after the closing and redemption of the
Premises from the Bank. Safferstein had asked Daley directly
while they were negotiating the sale whether there were any
other claims he should be aware of and Daley assured him
there were none. If Daley had disclosed the commission claim
to Safferstein before the closing it may well have affected
the deal, in particular the percentage ownership to Daley and
the payments to Daley Construction. [17] In contrast to
Daley's silence about Cushman & Wakefield prior to the
closing, Safferstein testified consistent with Dillon's
and Fagan's testimony that they did not learn of the
bankruptcy until after the property transfer on December 26,
[15] Daley's testimony was that he
had assumed the brokers had told Visiting Nurse. Because I do
not believe Daley told Dillon, Fagan or Foley about the
bankruptcy, I credit his testimony as far as his concern
about Visiting Nurse finding out about the bankruptcy. Daley
never told Visiting Nurses and there is no evidence the
bankruptcy was ever disclosed to that tenant.

that
after the closing Daley kept pressing him to contact Dillon,
which he did by email dated December 30, 2013, in which he
informed Dillon about the sale of the Premises " last
week to Titan Cambridge, LLC--An entity controlled by Titan
Capital ID LLC in partnership with Mr. Daley." On
December 31, 2013, Daley informed Safferstein for the first
time about the Cushman & Wakefield commission. [18] Daley
explained he had not disclosed the commission claim
previously, including when he had been asked directly by
Safferstein about any costs outstanding, because he thought
it had been discharged in bankruptcy. More likely, Daley
withheld this material information until after he received
his 37.5% interest in Titan Cambridge, the conveyance closed
and the Premises were redeemed from the Bank. Presumably,
Daley was hoping Safferstein would enter into an arrangement
with Cushman & Wakefield similar to the Larew payoff.

Safferstein
testified had he known about the Cushman & Wakefield
commission he would have insisted it be dealt with before he
closed on the sale. Safferstein was vague as to how that
would occur. The closing was four days before the drop dead
date, with Christmas in the interim. The reorganization plan
was already confirmed, and indeed it was never amended to
disclose the sale of the debtor's primary asset to an
entity in which Daley, an insider of the debtor, received a
37.5% interest. [19] There were insufficient funds left
in the estate to pay the commission; everything retained in
the estate was allocated in the Plan to pay bankruptcy
counsel, with the liens dealt with in the Plan to provide
clean title to Titan Cambridge. Daley was motivated to
conceal the Cushman & Wakefield claim from the Bankruptcy
Court and from Safferstein or risk losing his 35.7 % interest
in the new entity and the commitment to pay Daley
Construction to complete the fit out. [20] The Court credits
Safferstein's testimony that he did know about the
Cushman & Wakefield commission until he had conversations
with Daley and later Dillon on December 31, 2013.
[21]

The
fair market value of the Premises " as is" was $ 2,
600, 000 on December 26, 2013. [22] The $ 1, 300, 000 paid
to the Bank after the closing was not fair market value of
the fee, but reflected a distressed price in a non-market
sale of a majority interest based on the discounted
redemption price negotiated by the Bank. [23] In
exchange for that price, the Saffersteins received a 62.5%
interest at a below market discount. [24] Although there
was substantial deferred maintenance that would have to be
addressed by the buyer, no reliable evidence was submitted as
to the cost of such repairs, and the appraised value included
adjustments to reflect its " as is" Construction
when the fit out was completed. [25] As Safferstein and
Titan Cambridge pointed out, without these benefits to Daley
there would have been no reason for him to transfer title to
the Premises.

condition.
Safferstein's " back of the envelope" analysis
did not support his estimate that the property was worth $
2.3 million " as is" at the time of purchase, and
was always qualified by reference to an unspecified "
upside" he factored into the decision to purchase the
62.5 % interest that Safferstein declined to quantify.

Conclusions
of Law

The
Court Has Subject Matter Jurisdiction.

Defendants
have argued that this Court lacks subject matter jurisdiction
because exclusive jurisdiction is with the Bankruptcy Court
pursuant to 28 U.S.C. § § 327(a) and 1334(a) &
(e)(2)., Defendants' motion to dismiss was denied by
Judge Dale Radcliffe on December 19, 2016. [26] Although
I decline to regard Judge Radcliffe's ruling as "
law of the case", [27] I agree with him that the state
court has jurisdiction over Cushman & Wakefield's claims
in this action.

Defendants
also argue that only the Bankruptcy Court may approve
retention of a professional engaged while a bankruptcy is
pending under 11 U.S.C. § 327 and Fed. B.R. § 2014
because it is a core proceeding under 28 U.S.C. § 157.
Accordingly, Defendants argue: because Cushman &
Wakefield's retention was never approved by the
Bankruptcy Court, the listing agreement may not be enforced.
I conclude that Cushman & Wakefield is not barred by
bankruptcy law from pursuing its commission claim in state
court.

Cushman
& Wakefield was not aware of the bankruptcy until after the
Premises were conveyed by the reorganized CDT to Titan
Cambridge. Without such knowledge there was nothing Cushman &
Wakefield could have done to protect itself in the bankruptcy
proceeding. If CDT had disclosed the retention of Cushman &
Wakefield and its commission claim to the Bankruptcy Court
before the Premises were sold all its claims could have been
resolved in the bankruptcy proceeding. After the Plan was
confirmed and CDT's principal asset was sold there was no
substantial Chapter 11 estate left to administer.
[28]

The
Bankruptcy Court's jurisdiction shrinks after it confirms
a Chapter 11 plan. See In re Indicon, Inc., 2012 WL
1110115 *3 (B. Ct. Conn. 2012) (Schiff, J.), aff d
499 B.R. 395, (D. Conn. 2013) (Underbill, J),
rehearing denied 526 B.R. 466, 469-71 (D. Conn. 2015), aff d
645 Fed.Appx. 39 (2d Cir. 2016) (summary order). In Indicon
the debtor's landlord, a creditor, did not find out about
the debtor's bankruptcy until after the plan of
reorganization had been confirmed. The Bankruptcy Court,
affirmed by the District Court and the Second Circuit Court
of Appeals, concluded that it did not have subject matter
jurisdiction over the adversary proceeding alleging breach of
lease and bankruptcy abuses brought by the landlord because
the plan was already confirmed, the debtor was dissolved and
its assets were all distributed, a final decree was entered
and thus there could be no " close nexus" to
implementation of the plan so the remaining claims were
outside its jurisdiction because any recovery would "
have nothing to do with the administered estate." 645
Fed.Appx. at 40.

Judge
Underhill explained the shrinking of a bankruptcy court's
jurisdiction post-confirmation in In re Indicon, 499
B.R. at 400-402:

"
Vanguard invoked the bankruptcy court's jurisdiction
under 28 U.S.C. § 1334(b). That section of the United
States Code provides for " three types of district
court jurisdiction over bankruptcy proceedings: [1]
'arising under' jurisdiction; [2] 'arising
in' jurisdiction; and [3] 'related to'
jurisdiction.... 'Arising under' jurisdiction
exists when the proceeding invokes a substantive right
created by federal bankruptcy law. 'A claim "
arises in" bankruptcy if, by its very nature, the
claim can only be brought in a bankruptcy action, because
it has no existence outside of bankruptcy....'
Jurisdiction under 28 U.S.C. § 1334(b)'s
'related to' prong rests where the proceeding's
outcome 'could conceivably have any effect on the
estate being administered in bankruptcy.'" In
re New England Nat., 2012 WL 3987648, at *4 (Bankr.
D.Conn. Sept. 11, 2012); see Parmalat Capital Finance
Ltd. v. Bank of America Corp., 639 F.3d 572 (2d Cir.
2011).

The
bankruptcy court's post-confirmation jurisdiction is not
expressly limited under section 1334. Park Ave.
Radiologists, P.C. v. Melnick (In re Park Ave. Radiologists,
P.C.), 450 B.R. 461, 467 (Bankr.S.D.N.Y.2011).
Nevertheless, " most courts agree that once confirmation
occurs, the bankruptcy court's jurisdiction
shrinks." Id. Therefore, courts have crafted
tests to determine when a bankruptcy court may exercise
subject matter jurisdiction after confirmation of a
bankruptcy plan. The Second Circuit has used the " close
nexus test" to determine post-confirmation subject
matter jurisdiction. Last year, the bankruptcy court for this
district adopted the use of the " close nexus test"
following confirmation of a bankruptcy plan. See In re
New England Nat., 2012 WL 3987648, at *6. The bankruptcy
court of the Southern District of New York also uses that
test. See, e.g., In re Metro-Goldwyn-Mayer Studios
Inc., 459 B.R. 550 (Bankr.S.D.N.Y.2011)."

Judge
Underhill went on to explain what a party must show to invoke
the jurisdiction of a bankruptcy court post-confirmation:

"
'A party can invoke the authority of the bankruptcy
court to exercise post confirmation jurisdiction if the
matter has a close nexus to the bankruptcy plan and the
plan provides for the retention of such jurisdiction.'
In re DPH Holdings Corp., 448 Fed.Appx. at 137; In
re New England Nat., 2012 WL 3987648, at 4-5.
Here, neither requirement is met."

Judge
Underhill described the " close nexus to the plan"
test: Vanguard must show that the matter has a close nexus to
the Plan. In DPH Holdings, the Second Circuit found a close
nexus where the disputed issue would 'impact the
implementation, execution, and administration" of the
bankruptcy plan. 448 Fed.Appx. at 137." ' 499 B.R.
at 401.

Judge
Underhill concluded that the landlord's claims did not
have a " close nexus" to the plan for very
practical reason; the claims existed outside the bankruptcy
reorganization plan:

" In the case at bar, not only did the relationship
between Indicon and Vanguard arise before the bankruptcy
proceedings, the asset sale was not consummated until after
the confirmation of the plan, and Vanguard's fraud
allegations, although they arose in the context of the
bankruptcy, affect only Vanguard's right to recovery as
an administrative claimant."

Judge
Underhill distinguished core proceedings and ancillary claims
that do not affect the reorganization plan that are simply
too tenuous to the bankruptcy to sustain post-confirmation
jurisdiction:

"
The complaint in the case before this court alleges a series
of violations of the Bankruptcy Code and breach of a
commercial lease--claims that do not go to the core of the
bankruptcy process. Vanguard alleges that the connection
between the, Defendants' conduct and the bankruptcy
proceeding arises because the conduct affects payment on
Vanguard's administrative claim and the alleged
violations of the Bankruptcy Code. Again, a connection
between payments to administrative claimants and the
bankruptcy proceeding seems too tenuous to implicate the
bankruptcy plan. In any event, although the allegations may
implicate the integrity of the bankruptcy process, that is
not the standard the Second Circuit requires this court to
follow. There is a distinction between acts that 'affect
the implementation, execution, or administration' of the
Plan, as the Second Circuit's close nexus test requires,
and those that 'implicate the integrity of the bankruptcy
court', under the Third Circuit's broader test.
Although the, Defendants' actions may indicate, at best,
a lack of candor with the bankruptcy court, they do not rise
to the level the Second Circuit requires to allow the
bankruptcy court to retain jurisdiction, particularly in
light of the Plan's termination of the bankruptcy
court's jurisdiction upon entry of a final decree."
499 B.R. at 403-404.

Judge
Underhill found that the second prong of the test also was
not met because the plan did not retain post-confirmation
jurisdiction but its jurisdiction ended with the final
decree:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Here,
not only has confirmation been ordered, but the bankruptcy
court entered a final decree, signaling the administrative
conclusion of the bankruptcy case. See In re Gould,
437 ...

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